Correlation Between Citic Offshore and Anyang Iron

Can any of the company-specific risk be diversified away by investing in both Citic Offshore and Anyang Iron at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Citic Offshore and Anyang Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citic Offshore Helicopter and Anyang Iron Steel, you can compare the effects of market volatilities on Citic Offshore and Anyang Iron and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Citic Offshore with a short position of Anyang Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Offshore and Anyang Iron.

Diversification Opportunities for Citic Offshore and Anyang Iron

0.65

Correlation Coefficient

Citic Offshore  Anyang Iron

Poor diversification

The 3 months correlation between Citic and Anyang is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citic Offshore Helicopter and Anyang Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anyang Iron Steel and Citic Offshore is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Citic Offshore Helicopter are associated (or correlated) with Anyang Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anyang Iron Steel has no effect on the direction of Citic Offshore i.e., Citic Offshore and Anyang Iron go up and down completely randomly.

Pair Corralation between Citic Offshore and Anyang Iron

Assuming the 90 days trading horizon Citic Offshore Helicopter is expected to under-perform the Anyang Iron. But the stock apears to be less risky and, when comparing its historical volatility, Citic Offshore Helicopter is 1.33 times less risky than Anyang Iron. The stock trades about -0.24 of its potential returns per unit of risk. The Anyang Iron Steel is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  205.00  in Anyang Iron Steel on October 11, 2024 and sell it today you would lose (28.00) from holding Anyang Iron Steel or give up 13.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citic Offshore Helicopter  vs.  Anyang Iron Steel

Citic Offshore Helicopter

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Offshore Helicopter are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Citic Offshore sustained solid returns over the last few months and may actually be approaching a breakup point.

Anyang Iron Steel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Anyang Iron Steel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anyang Iron sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citic Offshore and Anyang Iron

The main advantage of trading using opposite Citic Offshore and Anyang Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Offshore position performs unexpectedly, Anyang Iron can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Anyang Iron will offset losses from the drop in Anyang Iron's long position.

The idea behind Citic Offshore Helicopter and Anyang Iron Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.